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Overtime: Finally, a break for the middle class

Robert Reich, professor of public policy | July 2, 2015

The U.S. Department of Labor just proposed raising the overtime threshold – what you can be paid and still qualify to be paid “time-and-a-half” beyond 40 hours per week – from $23,600 a year to $50,400.

This is a big deal. Some 5 million workers will get a raise (see video).

Business lobbies are already hollering this will kill jobs. That’s what they always predict – whether it’s raising the minimum wage, Obamacare, family and medical leave, or better worker safety. Yet their predictions never turn out to be true.

In fact, the new rule is likely to increase the number of jobs. That’s because employers who don’t want to pay overtime have an obvious option: They can hire more workers and employ each of them for no more than 40 hours a week.

It’s high time for this change. When the overtime threshold was at its peak a half-century ago, more than 60 percent of salaried workers qualified for overtime pay. But inflation has eroded that old threshold. Today, only about 8 percent of salaried workers qualify.

Overtime pay has become such a rarity that many Americans don’t even realize that the majority of salaried workers were once eligible for it.

We just keep working longer and harder, for less. A recent Gallup poll found that salaried Americans now report working an average of 47 hours a week — not the supposedly standard 40 — while 18 percent of Americans report working more than 60 hours a week.

Meanwhile, corporate profits have doubled over the last three decades – from about 6% of GDP to about 12% – while wages have fallen by almost exactly the same amount.

The erosion of overtime and other labor protections is one of the main factors worsening inequality. A higher overtime threshold will help reverse this trend.

Finally, a bit of good news for hard-working Americans.

[This post is drawn from a piece co-authored with Nick Hanauer with the help of the Center for American Progress.]

Cross-posted from Robert Reich’s blog

Comments to “Overtime: Finally, a break for the middle class

  1. I hold a BA in math from UC and an MA in econ from UCSB. I would appreciate your comments on the following:
    For the purposes of this discussion “The Haves” are identified as those “holding or controlling” less than one million dollars worth of assets. By this definition I estimate “The Have-Nots” to comprise more than 99% of the world’s population.

    The “Haves” represent an interesting ad mixture people, such as religious (the Pope, Christian mega-church leaders, Moslem dictators, organized crime (Mafia, South American Drug, Eastern heroin) leaders, and “legitimate” multi-millionaires such as doctors, politicians, and those on the boards of large cap companies.

    The “Haves” are responsible for almost all of the world’s pollution. This is obvious when one sees billowing smokestacks. Not so obvious are industries such as large agricultural which contribute methane to the atmosphere and pollute ground water while inefficiently producing meat from grain

    By not contributing their excess wealth to The World’s Have-Nots, The Haves are responsible for the squalid living conditions and poor health of most of the World’s Have-Nots.

    Assets (such as, but not limited to, stocks, investments, real estate, drugs, and money) valued at $1,000,000 or more in United States dollars.
    It has been estimated that more than half of the world’s undernourished could be fed on the grain currently used to feed cattle, pigs, and poultry.
    For the purposes of this discussion “excess wealth” of a “legitimate” company is defined as that in excess of $1,000,000 USD worth held by each employee or investor in the company. It is defined as 100% of the holdings of “illegal” concerns such as drug cartels. Religious denominations are considered “legitimate” companies, and their tangible assets (buildings, real estate, etc) are excluded; but each place of worship can only have up to $1M USD at any given time.

    Action Items

    1. Require each countries’ armed forces to take on organized crime, seize their assets, and place the assets on account with a newly established World Asset Redistribution (WAR) agency administered by the leaders of the world’s religions.

    2. Place a $1,000,000 USD (or equivalent in non-financial assets) limit on the holdings of everyone on earth. Put their current excess worth on account with the WAR agency.

    3. Produce, distribute, and sell at-cost currently “illegal” drugs. (This will put organized crime out of business, reduce the bloodshed currently involved, lower the price, improve drug quality, and recognize the fact that some people will be addicts whether the drugs are illegal or legal.) Return the savings in law enforcement and incarceration to the WAR agency.

    4. Require companies to charge only enough to cover costs including R&D.

    5. Eliminate the need for health care insurance by requiring companies to provide free health care and free drugs to all Have Nots. Only the companies’ costs (no profits allowed) will be paid by the WAR agency.

    6. Impose polluters tax on carbon producers including on the methane produced by the agricultural industry. Place revenues in the WAR account.

    7. Use the WAR funds to provide clean water, physicians services, and grains (not meat) for Have Nots in need.

    Q & A

    Q Does this eliminate capitalism and incentive to create?
    A No, it still allows individuals to accumulate $1M in assets.

    Q Does this change countries’ methods of governance (i.e. democracy,
    dictatorship, etc)?
    A No, that is not realistic. But even dictatorships could accept the action items; non-economic power (the ability to control others, wage war, etc) would be retained among the rulers, only the assets would be affected.

    Q Are these action items possible?
    A Only if the 99% insist.

  2. Great stats and great information! Finally giving back to people who work a lot and get very little in return in terms of equality. Thank you for the good news and hopefully I get that raise.

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